In an attempt to lessen punishment for economic crimes and improve the domestic investment climate, President Viktor Yanukovych’s administration is pushing legislation to decriminalize certain violations by individuals and businesses.
Discussions are also under way to apply the initiative to politicians, starting with opposition figures currently facing prison time. The whole effort is seen as part of a face-saving exit for Yanukovych, who stands accused by the European Union of trying to sideline political rivals ahead of next year’s parliamentary election.
But some warn that ulterior motives could be at play and that softening punishment for economic crimes could open up a Pandora’s box that weakens law enforcers’ ability to crack down on corruption in a nation where kleptocracy is widespread.
Andriy Portnov, head of the Judiciary Administration Department in the Presidential Administration, has spearheaded the much-anticipated changes to Ukraine’s Criminal Code and Criminal Procedural Code. While several drafts of the legislation exist today, the draft prepared by Portnov on behalf of the president does not provide leniency for political officials in government.
It replaces prison time with fines for businesses and citizens that commit economic crimes, such as fictitious bankruptcy, illegal use of foreign currency bank accounts and smuggling (except contraband of drugs and radioactive elements).
It is envisioned that fines will be set by a court, and calibrated to cover losses incurred to the state and along with a possible extra penalty.
The changes, according to Portnov, also offer to step back from widespread use of pre-trial detention of suspects and to introduce a more readily used bail system.
The aim, Portnov said, is to humanize Ukraine’s criminal legislation, decreasing abuse by officials who seek bribes and kickbacks through practices such as shakedowns. A boost in revenues for state coffers is also expected.
“Now courts have more room for maneuver in establishing whether to order a fine or a jail punishment for an economic violation,” Portnov said. With the legislative changes, courts will find it harder to “threaten anyone with a jail sentence,” he added.
Pandora’s box
Oleksiy Baganets, a 32-year veteran prosecutor and currently lawyer for jailed ex-Interior Minister Yuriy Lutsenko, generally praised the initiative. But he fears that, given the widespread culture of shakedowns and corruption in Ukraine, such legislation could actually backfire.
“I do not think that it will revive the economy and drop crime numbers. Rather, it could play into the hands of criminals and corrupt officials,” Baganets said.
Knowing that they will no longer face jail time, corrupt officials and citizens could seek to steal and cheat more, building up a cash reserve to cover fines and payoffs in case they are caught on some of their illegal economic activities. “In the case of contraband,” corruption could surge, Baganets added.
It could play into the hands of criminals and corrupt officials.
– Oleksiy Baganets, veteran prosecutor
Some economic and policy analysts predict that the so-called decriminalization plans will have little impact on the nation’s difficult investment climate.
The more effective way of tackling this colossal problem, they say, is to cut bureaucratic burdens, secure property rights, boost salaries for underpaid law enforcement officials who earn much of their income from bribes and install a fair and independent judicial system.
“All that is necessary to make investors confident that their investment and business will not be taken away if someone decided to do so,” said Oleksandr Zholud, an analyst at the Kyiv-based International Centre for Policy Studies.
Zholud doubts that the discussed legislation changes will boost budget revenues. Portnov could not specify how much money extra funds the country hopes to generate from fines and penalties.
‘Decriminalizing’ politicians
Discussions are also under way to tweak the legislative initiative so as to save opposition leaders, namely Yulia Tymoshenko and Yuriy Lutsenko, from prison time in connection with charges they currently face. Both remain jailed, despite not being convicted of any crime.
Scenarios that free Tymoshenko and Lutsenko could offer a face-saving exit for Yanukovych and help him meet the demands of European Union officials, who accuse the Ukrainian president of politically persecuting opponents and trying to sideline them from next year’s parliamentary elections.
Portnov stressed that his draft bill does not include changes that would exonerate Tymoshenko and other politicians for political decisions made, but rather replace prison sentences with fines.
But Yanukovych, according to sources, told the EU officials in closed-door talks in recent weeks that he could seek a face-saving exit from the Tymoshenko debacle through legislation that decriminalizes penalties for the charges that she faces – namely abuse of office as prime minister in reaching a 2009 gas deal with Russia.
Tymoshenko, who faces up to 10 years in jail under currently legislation when the judge hearing her trial reveals his verdict on Oct. 11, continues to profess her innocence and insists that she would neither ask Yanukovych for amnesty nor accept a decriminalization scenario.
But Viktor Shvets is one of a handful of lawmakers in her faction that has authored bills to change existing criminal legislation just enough to keep Tymoshenko out of prison and in politics.
Such a scenario could clear the path for Ukraine reaching a free-trade agreement with the EU, if Tymoshenko and other officials being tried are not banned from seeking elective office.
But Tymoshenko wouldn’t get off cheaply, even if she didn’t go to prison.
Dmytro Shantsev, a Regions Party parliamentarian, said on Sept. 30 that his party is ready to decriminalize the charges against Tymoshenko if she reimburses the state for alleged financial losses incurred because of 2009 natural gas supply agreement with Russia.
According to prosecutors’ estimates, the ruinous import prices agreed by Tymoshenko cost Ukraine nearly $200 million.
Tymoshenko’s allies describe such a tradeoff as “a farce,” and experts say the fundamental problem remains of dishing out criminal penalties for political decisions
